Singapore legislation
Regulation 16
Regulation 16
Adjustments for asymmetric foreign exchange gains or losses
Subregulation 1
This regulation applies where the accounting currency and the tax currency of a constituent entity of an MNE group are different.
Subregulation 2
Where, for a financial year —
the constituent entity has a gain or loss as a result of fluctuations in the exchange rate between its accounting currency and its tax currency; and
the gain or loss is reflected differently in its taxable income and in its FANIL,its FANIL must be adjusted so that the gain or loss is reflected in its FANIL on the same basis it is reflected in its taxable income.
Subregulation 3
Where, for a financial year —
the constituent entity has a gain or loss as a result of fluctuations in the exchange rate between its accounting currency and a third currency;
the gain or loss is reflected in its FANIL; and
the gain or loss is reflected differently in its taxable income,its FANIL must be adjusted to exclude that gain or loss.
Subregulation 4
Where, for a financial year —
the constituent entity has a gain or loss as a result of fluctuations in the exchange rate between its tax currency and a third currency; and
the gain or loss is reflected differently in its FANIL,its FANIL must be adjusted so that the gain or loss is fully reflected in its FANIL (whether or not it is reflected in its taxable income).
Subregulation 5
In this regulation —
Definition
“accounting currency” means the functional currency in which the financial statements of the constituent entity are kept;
Definition
“tax currency” means the currency in which the profits of the constituent entity are determined for the purposes of determining its liability to covered taxes in the jurisdiction in which it is located;
Definition
“taxable income” means income subject to, and determined for the purposes of, covered taxes;
Definition
“third currency” means any currency which is neither the accounting currency nor the tax currency of the constituent entity.